Formula 1 team Aston Martin needs money. But so does the car brand. That is now triggering a partial sale of the business.
Lawrence Stroll, chairman of Aston Martin, is increasing his stake in the company. It comes at a time when the car brand is experiencing challenges. The challenges are seen both in the stock market and in Formula 1. Stroll's action signals continued faith in the project.
The Aston Martin share has had a difficult period. Since September last year, the price has fallen significantly. At the time it was around 160 pounds, but is now below 80 pounds. This corresponds to a halving in just six months.
Several factors are cited as reasons for the downturn. Problems in the supply chain are cited as a significant part. In addition, delayed deliveries and weakened demand in China have played a role.
Reuters writes.
The economic difficulties have had consequences. Stroll has raised new capital for the company six times since joining in 2020. At the same time, the workforce has been reduced by five percent.
The Formula 1 team, which runs under the Aston Martin name, has also not delivered the desired results. Since the 2021 season, the team has used Mercedes engines. On-track success has been limited during that period.
The future with Honda and Newey
However, there are hopes of a turnaround for the Formula 1 team. From next year, the team will switch engine supplier to Honda. This means full factory support from the Japanese manufacturer.
Honda will design power units specifically for Aston Martin's chassis, allowing for closer collaboration between the chassis and engine departments, with the aim of creating the best possible overall package without compromise.
At the same time, Aston Martin has secured an agreement with Adrian Newey. Newey is a renowned designer in the Formula 1 world. He is behind the design of several successful racing cars throughout history.
Lawrence Stroll's investments include both the Formula 1 team and the car production itself, a concerted effort to strengthen the brand on multiple fronts.
The new deal means Stroll's personal ownership stake increases. His consortium, the Yew Tree Consortium, increases its stake from 27.7 percent to around 33 percent.
Financing and adjusted expectations
Aston Martin says that the Yew Tree Consortium has expressed interest in increasing its stake further, potentially up to 35 percent ownership.
To reach above 30 percent, the consortium must seek a waiver. UK stock exchange rules normally require a takeover bid for other shareholders when that threshold is crossed. Aston Martin expects the waiver to be granted.
Part of the funding for Stroll's increased commitment will come from a strategic sale. Aston Martin plans to sell a stake in its Formula One team, the Aston Martin Aramco Formula One Team.
The Company expects to obtain a price for the F1 share that is above the current book value. The book value is stated at approximately GBP 74 million (approximately DKK 984 million).
At the same time, Aston Martin is adjusting its expectations for the year. The carmaker now expects only modest growth in the number of cars delivered. Previously, the forecast was for growth in "mid-high single digits". The adjustment is due, among other things, to expected tariffs from the United States.
The future will show whether the new investments and strategic changes are sufficient. The goal is to improve the situation for both car production and the Formula 1 team.
You can read more about Aston Martin's road cars and Formula 1 news here at Boosted.dk. We continuously cover developments for the iconic British brand.
